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by winston » Wed Feb 22, 2023 9:46 pm
The sell-off that ended last October was rough. But it wasn’t a capitulation.
We didn’t get the sort of panic selling that’s necessary to put the bear to bed.
Whenever the NYSI rallies above its 9-day EMA, it indicates that momentum is turning higher – and that’s usually a good time to buy stocks.
Whenever the NYSI falls below its 9-day EMA, momentum is waning. That’s usually a good time to sell.
by winston » Sun Feb 26, 2023 7:19 am
I think now is a time that you should start considering when you will sell or, at the very least, start planning your next moves based on how the market reacts to the coming weeks or months.
The S&P 500 currently trades at a Price-to-Earnings ratio, or PE ratio, of 21.33. Looking back to the 1870s, the mean PE ratio is 15.99, and the median is 14.91. So, we are on the higher end of the average.
The S&P 500 is also trading at a 4.01 Price-to-Book ratio. Looking back to 2000, the mean is 2.96, and the median is 2.81. Again, we are on the higher end.
When we look at the S&P 500 Price-to-Sales ratio, we are currently at 2.33. The mean going back to 2000 is 1.68, while the median is 1.54. Once again, we are sitting on the higher end.
My advice is to start looking at ways to hedge your portfolio against a significant downturn. This means you buy an exchange-traded fund that will increase in value if the market turns negative. Two good options to consider are something like Direxion Daily S&P 500 Bear 1X Shares ETN (SPDN) or the Proshares Short QQQ (PSQ).
by winston » Mon Feb 27, 2023 6:31 am
I have been bearish since May 2022. However, I have to admit that the early 2023 evidence did increase the odds of a potential return to a bull market.
That party is over!
Let’s discuss the increasing evidence that bears are ready to come out of hibernation with much more downside to follow.
by winston » Thu Mar 02, 2023 9:48 pm
Right now, the market is not leaning much in either direction. There’s just about as many bulls as there are bears. So, the most frustrating action the market can do… is nothing.
Traders who have been aggressively bearish have struggled as the market refused to break lower. And folks who are wildly bullish are frustrated by the lack of upside momentum.
There’s no shame in sitting in cash and waiting for the market to show its next move before committing to one side or the other.
by winston » Sat Mar 04, 2023 9:16 am
The best way to set the backdrop for the February sell off, is by reminding everyone of this equation:
1. Higher Rates on the Way (5%+)
2. Higher Rates in Place til at Least End of 2023
3. 6-12 months of lagged economic impact
4. Already weak economic readings
5. Fertile soil to create recession and thus extension of the bear market with lower lows on the way.
The upcoming slate of economic reports will answer that question. Here are the key dates to keep in mind:
3/14 Consumer Price Index (CPI)
3/15 Producer Price Index (PPI), Retail Sales
3/22 Fed Meeting with Interest Rate Decision & Economic Projections
I still believe the long term trajectory calls for an extension of the bear market with new lows in hand by mid year. The most interesting part is WHEN we will finally see the market finally crack and head lower once again.
I sense these events in March should provide the necessary catalysts for the next big market move. With CPI on 3/14 and PPI on 3/15 it could indeed be a “Beware the Ides of March” situation.
Thus, I would recommend preparing your portfolio for the next leg down in the days ahead.
by winston » Sun Mar 05, 2023 8:39 pm
U.S. companies in the S&P 500 spent $5.3 trillion on buybacks between 2010 and 2020. Some analysts believe corporate buying power was responsible for 40% of the rise in stocks over that period, a huge contributing factor to the Great Bull Market of 2010 – 2020.
Given the current pace of buyback announcements, the 2023 calendar year could easily see more than a trillion dollars of buyback authorizations from companies making up the S&P 500.
Recent data out of Q4 earnings reports, with more than 90% of S&P 500 companies having reported, shows repurchases in Q4 were 18% below 2022’s Q4 buyback volumes.
Announced buybacks aren’t automatic. They are executed over years and always at the company’s discretion.
Goldman Sachs expects buybacks to decline by 10% if there’s no earnings growth in 2023.
And if the economy falls into a recession? That’s a death knell for buybacks. They historically decline by 40% in a typical recession.
by winston » Mon Mar 06, 2023 10:51 pm
The stock market is setting up for a short-term bounce. But make no mistake… the long-term and intermediate-term trends for the stock market remain bearish.
The S&P 500 closed February below its 20-month exponential moving average (EMA) line. That’s bearish.
And the NYSE McClellan Summation Index (NYSI) generated an intermediate-term sell signal two weeks ago. That’s bearish too.
Last week, the Volatility Index (VIX) generated a broad stock market buy signal.
So, while technical conditions remain bearish for the intermediate- and long-term time frames, the stock market is set up for a decent short-term bounce.
by winston » Tue Mar 07, 2023 8:18 am
Looking at the Dow Jones Industrial Average chart, it’s bounced off potential support along its late December low and its 200-day moving average. This is a positive sign, as it keeps the sideways trading range intact.
The S&P 500 looks to have found support and started a reversal from its 200-day line on Thursday and gained more ground on Friday.
The Invesco QQQ Trust (NASDAQ:QQQ) has also bounced off its 200-day average, indicating that there’s strong support at this level.
by winston » Thu Mar 09, 2023 5:35 pm
The withdrawal of capital from middle-class families has been "spectacular" .
Auto loans right now are approaching 14%, almost 20% of auto loans are one thousand a month, and so the middle-class families are getting hammered here".
"So the consumer pressures are violent, but on the high end, the wealthy are doing well with excess savings and higher interest rates."
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